Dow breaks 17,000 milestone on US jobs surprise

The US Dow Jones index has broken through the 17,000 mark for the first time in history as job figures highlighted the strength of the recovery in the world's biggest economy.

The Dow Jones rose 71 points, or 0.4%, on the figures, reaching 17,048 points. The US Bureau of Labor Statistics has announced 288,000 new jobs were added in June, well ahead of the 212,000 rise investors had been expecting. It also marks a rise on May's figure, which has been revised up to 224,000. The unemployment rate has dropped from 6.3% to 6.1%.

The S&P 500 also rallied, adding seven points to hit another all-time high, although the index is still short of the 2,000 milestone at 1,981.

The FTSE 100 rose 43 points on the news, or 0.6%, adding to gains made in the morning's trading in anticipation of the US reporting a healthy increase in jobs.

The figures serve as another sign of the US economy's resurgence in the second quarter of the year, having contracted by 2.9% in the first three months of 2014, as the cold winter took its toll.

'Many investors had been waiting for stronger evidence that the world's largest economy is in good shape and today certainly does that,' said Angus Campbell, analyst at FXPro. 'This will allow the Federal Reserve to continue in its tapering and even prepare the ground for raising rates next year.'

The jobs figures led to a surge in the dollar, leaving the pound down after a strong run this week on healthy UK economic data.

In today's other big macroeconomic event, the European Central Bank (ECB) has left interest rates unchanged following last month's decision to cut them to new lows. However, ECB president Mario Draghi has reiterated that the bank is committed to 'use unconventional instruments' if needed to support the eurozone economy, on top of last month's €400 billion stimulus package. 'We don't think our job is finished, not at all,' he said.

Draghi confined new measures to a change in the ECB's meeting cycle, switching from monthly to six-weekly, with the release of minutes from its meetings.

Sports Direct International (SPD) was among the biggest gainers, adding 39.5p, or 5.4%, to 767p after emerging from a bruising battle with shareholders to get its bonus scheme approved.

Less than two-thirds of shareholders backed the scheme, which will hand 3,000 permanent staff 25 million free shares, worth around £180 million, if the firm doubles its profits by 2019. The new proposals were made just weeks after shareholders had rejected a £70 million payout for founder and Newcastle United owner Mike Ashley. They haven’t been told how much Ashley will get from the £180 million pot.

Supermarkets performed well in morning trading, reversing losses made earlier in the week due to poor sales figures. Morrisons (MRW) added 2.9p, or 1.6%, to 182.5p, while Tesco (TSCO) rose 5p, or 1.8%, to 290p. Sainsbury’s (SBRY), which was caught up in the sell-off despite recording positive sales, gained 6.7p, or 2.1%, to 321p.

Online supermarket retailer Ocado (OCDO), a FTSE 250 stock, also performed well, adding 36.8p, or 9.1% to 440.5p, in its second successive day of solid gains after a small sell-off following first half results showing a marked reduction in sales growth in the second quarter.

Fellow ‘mid-cap’ stock Poundland (PLND) added 14.8p, or 4.5%, to 343.5p after the discount retailer reported accelerating sales growth. Shore Capital analyst Darren Shirley upgraded his forecasts for the stock, but gave no recommendation as Shore acts as broker for the company.

‘It is clear that full-year 2015 has started strongly and management speaks confidently about the group’s prospects, underpinned by a more buoyant consumer scene in 2014 to date, the relevance of the Poundland proposition to consumers from all socio-economic backgrounds and increasing support from manufacturers and suppliers,’ he said.

Balfour Beatty (BALF) fell 4.9% to 221.5p after the infrastructure group issued its second profit warning in just two months, blaming weakness in its mechanical and engineering division.

'We had expected Balfour Beatty to issue a trading update next Thursday and we hoped it would be less rock and roll than the last update,' said analysts at Jefferies. 'Unfortunately, we were wrong on both counts.'

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